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Hollinger 

pH 83 

Mill Run F03-2245 



A Way Out for Capital and Labor 



By Waddill Catchings 



Reprinted in part from the Atlantic Monthly 
of February, ig22 



I 



The Impossible Situation 

THE WEAPON OF THE 
LABOR-UNION— FORCE 

Although much might justly be said as to 
what labor-unions have secured for wage- 
earners, and as to the necessity for such 
organizations, in case employers are not willing 
to do what is fair in relation to their employees, 
yet, from the point of view of the man respon- 
sible for the operation and success of a business, 
the labor-union is a militant organization, 
to get results by force. Whatever may be 
the motive, there is the purpose to compel. 
Force need not necessarily be physical; but 
reliance upon pressure or force, of one sort or 
another, underlies the union's effort. 

The labor-union makes its own decisions 
regarding policies and standards, and, as far 
as possible, compels employers to accept these 
decisions. 

The strike is the great weapon of the labor- 
union. This is the economic, and often the 
physical, force which the labor-union brings 
to bear upon the employer, to compel him 
to act. Always the labor-union seeks to make 
the strike-weapon more and more effective. 

Wherever the labor-union can establish the 
closed shop (a shop where only union members 
can be employed), the strike-weapon is obvi- 
ously more effective. Therefore, the labor-union 
seeks the closed shop. 

To make the strike-weapon even more effect- 
ive, the labor-union opposes the forces of law 
and order. The militia and the state constab- 
ulary, when used to afford the protection of 
law, weaken the effectiveness of a strike; and 
therefore the effort of the labor-union is, con- 



stantly and unceasingly, to seek freedom from 
this interference. 

The labor-union seeks to get more for the 
workman and to make it possible tor him to 
work less. Whatever the workman gets, 
the labor-union is interested in seeing him 
get more; however little he may work, it is 
better if he works less. Apart from this, 
there is no goal for the labor-union. 

In this same spirit, and for a like purpose, 
the labor-union seeks to limit a workman's 
output. 

Restriction of output is brought about in 
part by insistence on a uniform wage — which 
means that there is no reward for hard work, 
and loafing on the job is encouraged rather 
than penalized. 

Not only are there efforts to limit output, but 
there are similar efforts to increase the number 
of men who must be employed. 

For a similar purpose are the elaborate rules 
governing the nature and extent of the work 
of the carpenter, the electrician, the mac.^iinist, 
the boilermaker, the housesmith, and other 
union members. 

One very serious effect of these efforts of the 
unions comes from the fact that at times they 
cannot agree among themselves regarding the 
work to be done by each union, and then great 
so-called "jurisdictional" rows tie up operations. 
Meanwhile, the employer is helpless. 

The very nature and basis, therefore, of the 
labor-union movement arrays employer and 
employee in battle. The organization is for 
struggle — to compel an adversary . to act 
against his will. Throughout the whole move- 
ment is the thought of class-antagonisms. 
For generations the campaign has been organ- 



I 



ized in this spirit and for this purpose. There 
must be no fraternizing with the enemy. All 
efforts to develop a common enterprise are 
opposed. The campaign is for contest and 
struggle. The weapon is the strike. The 
goal is more pay, less work. 



THE EMPLOYER INITIATED 
THE STRUGGLE 

The struggle between the employer and the 
labor-union is not constructive on either side. 

The labor-union struggles for power to com- 
pel action by the employer; the employer 
struggles for power upon his part. 

If he is forced by the union, he "gives in" as 
little as possible, and bides his time. 

Later, when economic conditions favor him 
instead of the union, he recovers, if he can, what 
he has given up, and gains, if possible, additional 
advantage in order to prepare for the next 
onslaught. 



This attitude of the employer, and the 
methods he has used in fighting the unions, are 
no doubt responsible for much that the unions 
do. 

Thoughtful men must in time see that what 
is needed is common effort. Production is 
clearly the true purpose of industry; employer 
and employee are inevitably engaged in a com- 
mon enterprise. 

The endeavor to get great power for the 
labor-union or great power for the employer 
must retard sound, constructive development. 

When the employer is engaged in a hard 
struggle to resist the unions, he cannot, even 
if he is so disposed, give the proper support to 
the development of a relationship sincerely 
based on this common effort. 

Thus the great struggle between the em- 
ployers and the labor-unions has necessarily 
made constructive work difficult. Passions are 
aroused, the atmosphere is one of suspicion and 
fear. Always there is the need of protection 
from attack. 



II 

A Way Out 

FAIR WAGES, HOURS AND WORKING 
CONDITIONS, ARE QUESTIONS OF FACT 

However, there has already been developed 
in a number of companies a relationship be- 
tween employer and employee which gives 
promise of an ultimate solution of this under- 
Tying industrial problem. 

Even now it is clear that, instead of the future 
promising, at the utmost, no more than the 
prospect of a drawn battle, with its disastrous 
consequences, there is ground for hope of a real 
common effort in industry, an effort based on 
the true principle of a joint enterprise. This 
relationship rests upon this great cornerstone — 
this all-important fundamental: — fair wages, 
hours, and working conditions are ques- 
tions of fact, to be decided as such. 

The rise and fall of activity in the business 
cycle bring times when there is much unem- 
ployment, when there are many seekers for a 
job and, often, at any wage or for any hours or 
under any conditions which will give a bare 



livelihood. At such times the employer has a 
great economic advantage in fixing the wages, 
hours, and working conditions of his employees. 

The underlying principle of the relationship 
under discussion is that the employer shall 
not take advantage of the opportunity 
thus given to him. On the contrary, it is 
based upon the fact that, at any time, for any 
company, there is a fair wage that can be paid, 
if any wage can be paid. The conditions in the 
company, in the industry, and general business 
conditions, determine this. Sometimes it is 
higher, sometimes lower; but whatever it is, it is 
not to be determined by the amount at which 
men would rather work than be out of employ- 
ment. Likewise, this is equally true of hours of 
labor and of other conditions of work. What this 
wage is, what these hours are, what these condi- 
tions of employment are — these are questions of 
fact, to be determined as such. 

Confusion and harm have come from the 
use of the expression "collective bargaining." 

Bargains are reached between negotiators. 
Where a man must sell, and this fact is 
known, there can be no true bargain. 






^C . (K-asi— 






COMPANIES WHICH HAVE 
ADOPTED THIS PRINCIPLE— 
THE QUESTION OF FACT 

In the different companies which have 
adopted this principle, the question of fact — 
what, from time to time, are fair wages, hours, 
and working conditions — has been determined 
in different ways. One way is that of the Stand- 
ard Oil Company of New Jersey. 

In March, 1918, this company invited the 
employees in its refineries to elect representa- 
tives to confer with the management. Since 
that time, all questions affecting wages, hours, 
and working conditions have been determined 
in conferences between representatives of the 
company officers and representatives of the 
employees. If the question affects only a de- 
partment, the meeting is with representatives 
of this department; if an entire plant, with the 
representatives of the plant; if several plants, 
with the representatives of these plants. The 
number of employees' representatives varies 
with the size of the plant, but it is ordinarily 
one for each 150 employees. 

In any meeting the representatives of the 
company are never more than the employees' 
representatives present, and, as each person 
has one vote, the company representatives 
never have a majority. In a practice extending 
now over three years, covering a period of 
decreasing as well as increasing wages, these 
meetings actually have decided the action of 
the company regarding wages, hours, and work- 
ing conditions. The Board of Directors is the 
final authority; but in actual practice these 
matters are harmoniously settled in joint 
conference. This experience alone has made 
clear that fair wages, hours and working con- 
ditions can actually be determined from time 
to time as questions of fact. 

The method of the Standard Oil Company 
of New Jersey is doubtless the most demo- 
cratic, and clearly one of the simplest. A 
similar method is in use by the General Electric 
Company at Lynn, Massachusetts. Other 
methods are the so-called Leitch plan, — in 
effect in numerous companies, — and the "In- 
dustrial Republic" of the Goodyear Tire and 
Rubber Company. In fact, there are all kinds 
and degrees of plans, endeavoring more or less 
successfully to accomplish the same purpose. 

It is by no means essential, however, that the 
method be democratic. Just as sometimes in 



political life an able and benevolent monarch 
furnishes a highly successful government, so 
in industry the officers of a company can 
actually determine from time to time what are 
fair wages, hours, and working conditions, with 
no more than informal contact with employees. 
Of this nature is the industrial situation ot the 
Endicott Johnson Corporation, probably the 
most satisfactory in the United States, possibly 
the most satisfactory in the world. 

A sharp distinction must be drawn between 
those plans which are designed to, and actually 
do, determine what are fair wages, hours, and 
working conditions, as questions of fact, and 
those which merely set up conimittees and 
company unions as a bulwark against the 
labor-unions. In both cases there is the 
struggle with the labor-unions, but in the one 
case it is in the background. The plan of the 
Standard Oil Company of New Jersey and the 
situation in the Endicott Johnson Corporation 
are inevitably bulwarks against the unions, 
or, at least, make their work unnecessary; but 
the unions are in the background. In these 
instances the primary purpose is constructive. 
In many companies, however, there is no con- 
structive purpose: the committees are merely 
part of a fight against the unions. 



UNIONS FIGHT PLANS 
TO END CONFLICT 

The difference is one of fact. Is the effort 
directed to determining what are fair wages, 
hours, and working conditions; or is the effort a 
smoke-screen to protect the company from 
attack, while the full force of economic pressure 
is brought to bear upon the employee? 

Of course, the unions fight all such plans to 
the utmost. Where the plans are not construc- 
tive, but are merely defensive, the reason is 
clear. But even constructive plans like that of 
the Standard Oil Company of New Jersey, 
which are not anti-union, and which, in fact, 
guarantee employees against discrimination on 
account of membership or non-membership in 
any union, are opposed by the union leaders with 
great intensity, although the union employees 
of the company do not share this hostility. 

There is one apparently serious objection to 
these efforts to determine what are fair wages, 
hours, and working conditions, and that is the 



contention that competition in industry makes 
it impossible for any one company to have fair 
wages, hours, and working conditions when 
other companies make full use of economic 
pressure to get lower costs, and thereby make 
prices to obtain what business there is when 
there is not enough for all. The answer to this 
is that, even with higher wages, shorter hours, 
and better working conditions, workmen apply- 
ing themselves wholeheartedly produce at a lower 
unit-cost than do those working merely under 
conditions established by economic pressure. 

To deal with employees in the manner 
described is the natural course for the corpora- 
tion. The struggle between the employer and 
employee in the corporation is unnatural and 
inconsistent. 

In fact, in the corporation, as it is develop- 
ing, there is no employer, in the old sense of the 
word. The corporation to-day is a joint enter- 
prise. The money is supplied by stockholders, 
bond-holders, note-holders, banks. The work 
is done by men and women. Money and labor 
together engage in production. The officers of 
a corporation are employees. If they have no 
money in the business, they supply merely 
labor; if they do supply money, so does the 
humblest workman who buys a bond or a share 
of stock. A stockholder or other contributor 
of money may any day sell out to some one else. 
It often happens, on the other hand, that a 
workman devotes his life to learning the busi- 
ness, and establishes his home where the 
company operates. An employee whose liveli- 
hood thus depends upon the success of the 
corporation is more truly interested in that 
success than any one else. Stockholders usually 
distribute their risks among various corpora- 
tions; workmen often stake everything on the 
success of one corporation. 

It is, therefore, a natural and normal develop- 
ment for the management (who are employees) 
to say to all the employees, "In determining 
what this company will do regarding wages, 
hours, and working conditions — we shall sit 
down together and decide together what to do." 



CONSTRUCTIVE EFFORT IN 
OTHER DIRECTIONS 



013 742 142 2 - 



Wages, hours, and working conditions are not 
all that interest the worker. The discussion so 
far has been confined to these matters, because 
around them centres the struggle with the 
unions. Once, however, this struggle is in the 
background, constructive effort follows in many 
directions. 

For example, if the principle is followed of 
deciding fair wages, hours, and working condi- 
tions as matters of fact, profit-sharing may be 
successfully adopted. This may become de- 
sirable, inasmuch as a well-run business may 
from time to time earn very large profits. These 
may come from team-work; they may come 
from the play of supply and demand, from good 
management, or from good fortune. They may 
justify high wages, and still be far beyond the 
reasonable expectations of stockholders. 

It is hardly necessary to say that piece-work, 
and other methods of pay proportionate to 
work, also rapidly develop under the conditions 
discussed. This is likewise true of bonus pay- 
ments, and other methods of sharing in the gains 
coming from effective work. 

All these developments are steps toward 
solving one of the great problems of the world — 
the fair enjoyment of the world's products. 
Fair wages, fair hours, fair working conditions, 
pay in proportion to work, reward in proportion 
to accomplishment, profit-sharing, ownership 
of stock, sick-benefits, annuities, insurance, 
hospitals, safety, sanitation, amusement, recrea- 
tion, exercise, schools, libraries, good cheap 
food, clothes, household goods, homes — each 
is a step. 

More and more we learn that there is no 
panacea, no cure-all. The problem is not of our 
creation, but comes to us from the past. One 
step at a time, a little gain here, a little gain 
there, and ultimately the problem will be 
solved — not, however, by blind struggle, but 
by slow, careful, dehberate, constructive joint 
effort. 



